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Importance of Corporate Governance on Bank Risk Management
Finance & Accounting
Pages 6 (1506 words)
Name Professor Course Date Importance of corporate governance on bank risk management Introduction Corporate governance entails a variety of systems, principles plus procedures which direct a company. These principles and procedures provide a basis through which a company runs in an organized manner in order to fulfill goals plus objectives.
This paper concentrates on the application of these principles in banks and their importance in bank risk management. Corporate governance is important in banking institutions because it ensures that procedures are in adherence. Banks faces various risks which require proper planning on risk management in order to deal with them amicably (Gup 281). Corporate governance ensures equal treatment of shareholders by giving them a chance to participate in critical matters. This is possible in participation of meetings where important matters concerning a bank are in discussion. Here, the bank exposes the shareholders to decision making thus they exercise their rights (Matutes & Vives 5). They contribute by giving their opinions on certain vital issues hence helping the bank management on risks that it is likely to face (Matutes & Vives 5). The shareholders of banks via the participation in meetings feel respected because of involvement in decision making. This way, the bank exercises openness which is an important aspect in corporate governance (Tang & Changyun 52). The application of corporate governance ensures risks such as credit risks, liquidity risks, and market risks are in good management. ...
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